by Julian Spector
July 28, 2017

Energy storage fans don't need an HBO subscription to watch a beloved character return from the dead.

This week, the much discussed Aquion Energy emerged from bankruptcy with some mysterious new ownership. I covered this saltwater battery maker's second wave earlier, but have some additional thoughts.

First, a selection of alternative headlines:

  • Salt Wars: Episode II
  • The Salt Also Rises
  • The Salt Tank Redemption
  • Ocean's Chapter 11

Aquion garnered plenty of media buzz in part because it was among the furthest along of the lithium-ion alternatives. Its bankruptcy set a disconcerting precedent for the space: as a nontoxic, long-duration battery, you could raise a bunch of VC money, build your own factory, deploy 250 systems and still run out of cash before you hit your stride.

Now, at least, the technology will have another shot at getting out into the world, although a $9.16 million payout on a $190 million investment won't fit anyone's definition of a good day at the races.

The buyer marks a new entry on the list of Chinese investors picking up struggling American storage startups on the cheap (hello, A123). It's a little more complicated, though -- the company is calling the new ownership "a majority-American joint venture," but the LLC was only registered in Delaware in May and is connected to China Titans Energy Technology Group, a Chinese power electronics investment holding company.

In the end, it wasn't a strategic buyer from the off-grid or microgrid segments. In fact, we don't know much at all about the new CEO's intentions, because he has a nearly invisible online presence.

What should a young energy storage-preneur distill from all this?

Don't rely on VCs to get you all the way there. The good souls on Sand Hill Road shelled out more for Aquion than most storage companies ever see, but they weren't there to close the gap in the moment of need.

Then again, if there were more market demand for the product, maybe they would have shelled out. Long-duration storage has to fight the Catch-22 that there are limited revenue streams for long-duration batteries because the technology hasn't been available for very long, but the companies that have the technology have trouble scaling because of the lack of market for it.

There's no killer app for that. The simplest strategy is unsexy and laborious: Keep chugging away, selling where you can, however far afield, until more customers have heard about it and feel comfortable with the real-world runtime you've recorded to date. In other words: get some capital, burn it slowly and responsibly, and hope you hit a sweet spot of market fit before the money runs out.

Twilight of the mandates?

The same week California's legislature scuttled a long-term storage funding program, I heard directly from New York Energy Czar Richard Kauffman, who offered up a nuanced critique of just the sort of top-down storage mandate the state's legislature unanimously passed.

We're still waiting on Kauffman's boss, Governor Andrew Cuomo, to sign or veto that measure. Kauffman wouldn't address which way that decision might go, but let's just say he didn't sound like a mandate's number-one fan.

"When I talk about building out a network, building out the grid of the future, it's hard for me to see how it can be centrally planned," Kauffman told me.

Also: "The easy way to do things is to have mandates; the harder but more impactful way is to challenge the industry and the utilities to think about different approaches. If there's some last bit that you need because the numbers don't quite work yet, then we can layer in a mandate or layer in some financial support as a stopgap."

Kauffman wasn't advocating wholesale opposition to mandates. New York, after all, adopted a renewables mandate of 50 percent by 2030.

The debate has more to do with order of operations. The legislature would institute a storage mandate in order to jump-start the industry there, in the hopes of aiding the transformation of the grid. Kauffman was saying the state should fix the market structures so storage can participate, and if the industry still needs a boost, a mandate could come in to help them close the gap.

For a bit, it looked like the evolution of state-level storage policy would be successive state mandates opening up markets. Now that scenario looks less certain. Wholesale redesign of markets is harder than picking a number and telling utilities to go for it, but it's necessary for sustainable, long-term growth. If New York does the hard work of slogging through that, it'll be much easier for other states to follow suit.

Sunrun reaches Arizona with BrightBox

Arizonans can now access Sunrun's hybrid offering, which had been available only to California and Hawaii.

The company has zeroed in on the uncertain future for residential solar compensation in the state. Full retail-rate net metering is out, and a lower rate is coming, with more changes possible down the road. There's a localized nod to resilience against "afternoon dust storms and heavy rains." 

Sunrun likes pushing customers toward its lease and PPA options, and stacks those options with full service and 95 percent performance guarantees that the cash or loan deals lack. In its first-quarter earnings, Sunrun reported that 93 percent of solar installations were leased.

CEO Lynn Jurich attributes those numbers to giving the customers what they want, although the overall market will be majority customer-owned this year, according to GTM Research predictions.

At a time when residential storage financing has barely gotten off the ground, Sunrun has been making it work and pushing out volume. Last we heard, it had sold 1,000 units, which is a bit more than the entire U.S. residential storage market last year (grid-connected, that is). Another way to read this product launch is that Sunrun feels confident enough in its home storage revenue streams within Arizona's rate structures to offer financing on BrightBox there.

Arizona's having all the new solar-plus-storage fun these days. That's where Sonnen chose to launch its collaboration to equip newly built housing divisions with their smart storage alongside rooftop solar. It's also where JLM and Arizona Public Service are duking it out in a legal battle. Both sides refused to comment on the pending case. 

Solar+storage for the smart/connected/IOT/fancy color-changing lightbulb crowd

The storage industry is still picking off the low-hanging fruit in terms of reducing friction for the consumer. Mountain View-based SolPad appears to have leapt several branches ahead with its new integrated modules.

Enphase and LG just fine-tuned their AC module, which inserts the inverter into the solar manufacturing. SolPad sees that and raises it a battery, plus wireless controls and automatic system configuration. 

The company makes a 25-pound mobile version, as well as full-sized modules for rooftops, both of which come out in 2018. This product is basically a microgrid in a box.

It's hard to gauge SolPad's potential relative to other solar-plus-storage options, because it's a wholly different beast. The Mobile costs $1,795 and is geared toward the Goal Zero market, said CEO Chris Estes. That means the typical customer wants clean power to light up their #vanlife or Burning Man encampment, not to offset their PG&E bill in a carefully calculated manner.

The sophisticated energy management software rewards those who own a menagerie of smart home products, which can sync up with the SolPad's generation and storage.

Stationary storage as sold today cannot really claim to be consumer electronics. It's expensive and heavy and requires experienced electricians to install. But if it can cross over to an experience that's more like pulling a new iPhone out of the box and turning it on, there's big money there. 

Recall that Google bought smart thermostat company Nest for $3.2 billion, and that was in 2014. GTM Research analysts expect the entire U.S. storage market to be worth that much in 2022. 

Albion's storage

I haven't seen Dunkirk yet, but the tale of British seafarers of all sorts rallying to save their troops from destruction on the shores of France has the critics abuzz. I say bring back those 70-millimeter cameras, because Britain's embrace of energy storage is similarly epic.

The U.K.'s business and energy secretary (good on them for combining those titles) unveiled a GBP £246 million battery research and deployment program dubbed the Faraday Challenge. That's the same size as the entire U.S. storage market in 2016, and last I checked the U.S. grid was really big.

Ultimately, the more enduring element in this plan will be the energy regulator's pledge to streamline the rules and make storage easier to deploy. Government grants dry up, but markets are forever, or something like that.